VALUE OF PARTNERSHIP BETWEEN UNITED NATIONS AND PRIVATE SECTOR STRESSED BY DEPUTY SECRETARY-GENERAL
Press Release
DSG/SM/28
VALUE OF PARTNERSHIP BETWEEN UNITED NATIONS AND PRIVATE SECTOR STRESSED BY DEPUTY SECRETARY-GENERAL
19981106 Speech to New York Business Group Notes Growing Mutual Recognition; Some Easing of Global Financial Crisis Is Seen, with Chronic Problems RemainingThis is the text of a statement by Deputy Secretary-General Louise Fréchette to the World Business Council for Sustainable Development in New York on 5 November 1998:
It gives me great pleasure to join you tonight and to see you here at the United Nations. The business community is fast becoming one of the Organization's best friends and allies, and I am pleased to have this opportunity to expand our growing ties.
Your group, especially, under the leadership of Björn Stigson, has been ahead of the curve. You have shown exemplary commitment to both halves of the term sustainable development. You recognized the Earth Summit, not as a burden but as a compelling business opportunity. And in your efforts since then you have ensured that economy, ecology and social concerns are integrated in all that you do. You have brought the idea of "partnership" to life. I applaud your foresight and your courage.
I say courage because, not so long ago, a gathering such as this one would have been quite unusual. As you know, the private sector used to be rather wary of the United Nations. And the United Nations, for its part, was often leery of the corporate world. I think you will agree that a fundamental shift has occurred.
The United Nations has developed a profound appreciation for the role of the private sector: its expertise, its innovative spirit, its unparalleled ability to create jobs and wealth. At the same time, business and industry are recognizing the many virtues of the work of the United Nations for political and social stability and for a predictable, rule-based environment for trade, production and investment.
More and more, in a world of common interests, common challenges and common vulnerabilities, the United Nations and business are finding common
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ground. Our relationship has taken great strides. The doors of the United Nations are open to you, and to the increasingly robust forces of civil society, as never before. You are involved in policy debates at Headquarters and at world conferences. You are working on the ground, around the world, with United Nations programmes and agencies in a remarkable array of development projects. Such activity is in everyone's interest. It is only right that, in an age of globalization, global problems are addressed with all actors at the table.
But it is not enough just to say that. We need to think seriously about the kind of solutions we are looking for. And we can do so only if we have a clear understanding of the nature of the problems we face. As I see it, the problems facing the world economy today are twofold. First, the global market we all like to talk about is still very imperfect, because at the global level there are still important gaps in the framework of rules which any market needs to function properly. And second, even when the market does function perfectly, there can be consequences which leave large groups of people dissatisfied, and so expose the whole market system to the risk of a destructive backlash.
The first point is one that we all understand in theory. Market liberalization has brought tremendous gains to people all over the world. But we all know that markets cannot function in isolation. We know they need the rule of law. And the recent financial turmoil has reminded us that there are still gaps and asymmetries in the framework, both at the national level in many countries, and at global level. In the last week or two there have been some hopeful signs that the worst of the crisis might be over.
Brave decisions by governments in some of the worst-affected Asian countries -- Thailand, Korea, Indonesia -- are gradually restoring investor confidence and opening the way to renewed export-led growth, which should be further stimulated by the multiplier effect of Japan's Miyazawa Plan. Meanwhile, interest rates have eased in Europe and the United States, fuelling a recovery in the stock markets. And the third quarter results for the United States economy show continued and robust growth.
But dangers remain. We must all be watching with great anxiety to see how Brazilian society copes with a draconian adjustment plan, aimed at preserving hard-won price stability. (Remember that Brazil already has 11 per cent unemployment, and 17 per cent in the major industrial centres.)
You know better than most, I'm sure, the dangers that face a significant group of emerging countries if the markets remain for long in the mood of aversion to almost any kind of risk, which has gripped them since major hedge funds ran into trouble a few weeks ago. There is a real tragedy there which must be averted -- if necessary by timely and decisive intervention from the public sector.
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But, even if these risks can be averted and the world economy is now heading for a less volatile period, it would be quite wrong for us to sit back and say "all is well". Because even if markets recover, it will take years to repair the damage the crisis has already done to millions of families in East Asia and elsewhere.
Indeed, some of it can never be repaired. In Indonesia, according to the local United Nations Children's Fund Director, infant and maternal mortality has risen sharply since the crisis struck. And more than half the children under the age of two across the country are believed to be malnourished.
In the next age group up, 8 million Indonesian children have dropped out of school. In Korea schoolchildren, including primary ones, are going without lunch because their parents cannot afford it. In many parts of the region, crime and violence are on the rise.
If remedial action is not taken soon, this economic crisis will turn into a much bigger and longer-term crisis of development. Yet governments are having to slash spending on social services just when they are most needed.
That is the picture in East Asia, where the crisis started and the contrast with previous years is sharpest. But we all know that other parts of the developing world are affected too, as commodity prices fall and investors take flight. And the same sort of grim news is now coming in from Russia.
Much of this can be ascribed to the imperfections of the market -- ill-regulated banking systems, lack of transparency, crony capitalism, premature capital account convertibility, and also some deficiencies in what is called the "global financial architecture".
Terrible mistakes were made. Many painful lessons have been learnt. But the process of analyzing what went wrong and drawing conclusions from it, both about policies and about institutional arrangements, is far from complete. It must continue.
Now, however, I come to my second point. Unfortunately, it will not be enough simply to correct the imperfections of the global market, and then sit back and wait for the invisible hand to do its work. Because the sad truth is that hundreds of millions of people in our global economy as it exists today are not players in the market at all.
They do not have basic education, shelter, clean water, or an adequate diet during their childhood. They do not have access to a network of transport and communications connecting them to potential suppliers and customers, or employers, which everyone must have who aspires to compete in the market. And many of them are exposed to war or arbitrary violence.
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The crisis has, sadly, increased the number of people who are thus marginalized and excluded from the market. But it did not create the problem. Indeed, there is considerable evidence that, even at the height of the boom, the process of globalization was actually widening the gap between rich and poor, both within countries and between them. Hundreds of millions of people were not benefiting from globalization.
No doubt over decades the market will gradually expand, embracing a larger and larger proportion of humankind. However disappointing the current setback of the Asian economies, and however tragic some of its consequences, it has by no means undone all the progress they had previously achieved. That transformation has rescued more people from poverty in a shorter time than has ever happened in previous history.
But millions who are alive now will be dead before that process touches them. That is not only a terrible tragedy. It is a terrible waste of human talent and resources. Just think how many people are going to live and die without being given a chance to make their unique contribution to human progress.
It is not a thought that any of us should be comfortable with. But perhaps the more fortunate amongst us may be tempted to brush it aside.
Ladies and Gentlemen, I humbly suggest to you that to do so would not only be immoral. It would be imprudent. Because not all those people are going to wait patiently for death, or for the benefits of the market to reach them. Their plight will provide arguments, and they themselves may provide recruits, to those who urge abandoning political and economic freedom in favour of alternative paths to salvation. Twenty years ago such thoughts would have evoked the spectre of communism. Now I could mention other "-isms": populism, fanaticism, nationalism, ethnic chauvinism, terrorism.
All of those are stalking the world today, pointing to the apparent crisis of capitalism. They are enlisting the frustrated and deprived as recruits to their cause. In short, we have not only to correct the imperfections of the market but also to do something for those who at present are excluded from the market and its benefits. Otherwise we face the risk of a backlash which may threaten the rule-based trading system itself, because angry people will blame their misfortunes on it.
What is really needed, I believe, is a clearer framework not just of rules, but of ethical values, within which the market can operate. And in saying that to this audience I feel confident that I am preaching to the converted. You represent that wing of the business community which is at last grappling with the notion of corporate citizenship; which accepts that there are other stakeholders in the success of an enterprise besides those who buy and sell its stock in the equity market. I am pleased to note that you have
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set up a working group on corporate social responsibility, headed by Shell and Rio Tinto, and I hope we at the United Nations can work with it.
Some of your members have an annual turnover which far exceeds the national product of many of the countries where they are established, including even such regional giants as South Africa and Brazil. I know that scale of activity doesn't always make you feel as powerful, individually, as it makes you look, collectively, to the outside world. But I hope it does give you a strong sense of responsibility.
Sometimes, indeed, when non-governmental organizations and consumer groups are belabouring you from all sides, you may feel you are being held responsible for everything that is wrong in every country where you have investments. You are blamed, it seems, for every peasant who is expropriated or beaten up by the police, every acre of rain forest that is slashed or burned, every child who is working in a sweatshop instead of attending school.
The way to answer these accusations, as some of you have realized, is to make sure that your activity in the countries where you invest is a shining example, which helps raise the standard of working conditions and environmental practices in the country as a whole.
Some of you, I believe, have also understood that once you invest in a country, its human rights record becomes part of your business, whether you like it or not. You may not be able to transform the standard of human rights throughout the country overnight. But you can include the Universal Declaration of Human Rights in your mission statements. (No Government can object to that, since all 185 Members of the United Nations have endorsed it.) And above all, you can make sure that you yourselves are not complicit in human rights abuses.
Some of you have engaged in a dialogue on these issues with at least your more reasonable critics among the NGOs -- a dialogue which requires patience, but which both sides almost invariably find fruitful.
We at the United Nations would certainly encourage you to move in that direction. And we may even be able to help you do it. We have extensive experience of working with NGOs to forge a consensus among governments on universal norms and standards, and then helping to implement them in practice. We have done that on issues running from climate change through arms control to international criminal justice.
On some of these issues the corporate sector has already played an important part, and has found it useful to do so, precisely because of the universal character of the United Nations, and the wide acceptance of its principles. Few governments, and few NGOs, will refuse the chance to take part in a dialogue organized within the United Nations framework; and few,
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once they do so, will resist the pressure to join in the search for consensus, transcending purely sectional interests.
Through a series of major conferences, in which all the governments of the world have participated, we have forged a consensus in three areas which should be of particular interest to business:
1. There are minimum standards and conditions to which workers are entitled wherever they may live. These include freedom of association and the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; equal rights to work, and equal rights at work, without discrimination on grounds of creed, gender or ethnic origin.
2. Human rights are essential for everyone, but they are also indivisible. They include both economic and social rights and formal political freedoms.
3. Sustainable development must mean what it says: poor countries need economic growth, but growth must follow a model which is both ecologically and socially sustainable. Environmental management must follow a precautionary approach, and the corporate sector must assume its share of responsibility. In particular, it should actively seek to invest in environmentally friendly technology, and to promote its wider diffusion.
Achieving these standards worldwide is of course not a simple matter. It will take time. But it will come about only if each of us starts by publicly supporting them, advocating them, and implementing them in our own practice.
Finally, ladies and gentlemen, I would stress that such standards cannot be isolated from the general process of development. Development will not be achieved if labour and human rights and the environment are trampled on. Nor, however, will standards in any of those areas improve if development does not happen. Which is why our priority, like yours, must always be to work with the development process, not against it.
And that, of course, means working with developing countries -- not only with their governments, but with as broad as possible a range of economic actors and social groups.
My remarks tonight have been on a rather general level. They have probably raised more questions than they have provided answers. We are all in search of answers, and I look to you to help find them quite as much as -- probably much more than -- you can look to me. Your slogan "Solutions through partnership" is one that could well be our motto at the United Nations. I don't know if we shall find solutions, but in partnership with you I think we have a better chance.
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